Gold prices slip globally in May, India emerges as rare bright spot with 4.1% gain: Report 

Gold prices slipped in May despite persistent geopolitical tensions and economic uncertainty, but India emerged as one of the few major markets where local gold prices continued to rise, according to the World Gold Council's (WGC) latest Gold Market Commentary.

The precious metal ended May at $4,546 per ounce, down 1.4% in US dollar terms, as improving investor risk appetite and modest outflows from gold exchange-traded funds (ETFs) weighed on prices. The decline came even as global investors continued to grapple with concerns over inflation, interest rates, and geopolitical tensions in West Asia and Eastern Europe.

India sparkles

While gold prices fell in most major currencies during the month, India stood out as an exception.

According to the WGC, gold prices in India rose 4.1% in May, making it one of the best-performing major gold markets globally during the month. On a year-to-date basis, Indian gold prices have gained 17.6%, significantly outperforming several developed-market counterparts.

The rise was driven by a combination of local currency weakness and domestic market factors, which helped offset the decline in international bullion prices.

Turkey was the only other major market to record a positive monthly return, with gold prices rising 0.2% in local currency terms.

ETF outflows

The WGC attributed much of May's weakness to improved risk sentiment across global financial markets.

As investors shifted money toward equities and other risk assets, gold ETFs witnessed net outflows, particularly from the US and Asia. Global gold ETFs saw outflows of approximately $2.3 billion, equivalent to 17.3 tonnes of gold, during the month.

At the same time, a decline in market volatility reduced demand for traditional safe-haven assets such as gold.

However, the WGC noted that a weaker US dollar provided some support to bullion prices and prevented a steeper decline.

China, India and Central Banks

Despite the recent correction, the World Gold Council remains constructive on gold's long-term outlook.

A key reason is the continued structural demand from major buyers such as China, India and central banks worldwide. According to the report, these sources of demand are less sensitive to short-term movements in US interest rates and can provide an important support base for prices.

The WGC argues that even if the US Federal Reserve is forced to raise rates later this year due to persistent inflation pressures, demand from Asian consumers and official institutions could help cushion downside risks.

Outlook hinges on...

Looking ahead, the WGC believes the biggest near-term risk for gold comes from energy markets.

A sustained rise in crude oil prices could push inflation expectations higher, strengthen the US dollar and lift bond yields, creating short-term headwinds for bullion.

At the same time, the report notes that gold has historically performed better than many investors expect during periods of monetary tightening. In more than half of Federal Reserve rate-hike episodes since 1997, gold delivered positive returns after the hike.

For Indian investors, the combination of strong domestic demand, central bank buying, and ongoing geopolitical uncertainty suggests that gold is likely to remain an important portfolio hedge even as global markets navigate a challenging macroeconomic environment.